Chapter 2, Problem 2.4E

Analyze the Impact of transactions on the accounting equation (LO2–2)

Boilermaker House Painting Company incurs the following transactions for September.

1.    Paint houses in the current month for $15,000 on account.

2.    Purchase painting equipment for $16,000 cash.

3.    Purchase office supplies on account for $2,500.

4.    Pay employee salaries of $3,200 for the current month.

5.    Purchase advertising to appear in the current month, $1,200.

6.    Pay office rent of $4,400 for the current month.

7.    Receive $10,000 from customers in (1) above.

  8.    Receive cash of $5,000 in advance from a customer who plans to have his house painted in the following month.

Required:

For each transaction, describe the dual effect on the accounting equation. For example, for the First transaction, (1) assets increase and (2) stockholders’ equity increases.